Sunoco 2009 Annual Report Download - page 59

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overall cost of operating Sunoco’s businesses, including remediation, operating costs and capital costs to
construct, maintain and upgrade equipment and facilities. Existing laws and regulations have required, and are
expected to continue to require, Sunoco to make significant expenditures of both a capital and an expense nature.
The following table summarizes Sunoco’s expenditures for environmental projects and compliance activities (in
millions of dollars):
2009 2008 2007
Pollution abatement capital* .................................. $176 $356 $230
Remediation .............................................. 39 42 41
Operations, maintenance and administration .................... 217 210 196
$432 $608 $467
*Capital expenditures for pollution abatement include amounts to comply with the 2005 Consent Decree pertaining to certain
alleged Clean Air Act violations at the Company’s refineries. Pollution abatement capital outlays are expected to approximate $118
and $119 million in 2010 and 2011, respectively.
Remediation Activities
Information regarding remediation activities at Sunoco’s facilities and at formerly owned or third-party sites
is included in the discussion under “Environmental Remediation Activities” in Note 14 to the Consolidated
Financial Statements (Item 8) and is incorporated herein by reference.
Regulatory Matters
Through the operation of its refineries, chemical plants, marketing facilities, coke plants and coal mines,
Sunoco’s operations emit greenhouse gases (“GHG”), including carbon dioxide. There are various legislative and
regulatory measures to address GHG emissions which are in various stages of review, discussion or
implementation. Current proposals being considered by Congress include a cap and trade system that would
begin in 2012 which would require the Company to provide carbon emission allowances for emissions at its
manufacturing facilities as well as emissions caused by the use of fuels it sells. The cap and trade program would
require affected businesses to buy emission credits from the government, other businesses or through an auction
process. While the exact amount of such costs would not be established until the future, the Company believes
that these costs could be material, and there is no assurance that the Company would be able to recover them in
the sale of its products. Other federal and state actions to develop programs for the reduction of GHG emissions
are also being considered. In addition, during 2009, the EPA indicated that it intends to regulate carbon dioxide
emissions. While it is currently not possible to predict the impact, if any, that these issues will have on the
Company or the industry in general, they could result in increases in costs to operate and maintain the
Company’s facilities, as well as capital outlays for new emission control equipment at these facilities. In
addition, regulations limiting GHG emissions or carbon content of products, which target specific industries such
as petroleum refining or chemical or coke manufacturing could adversely affect the Company’s ability to conduct
its business and also may reduce demand for its products.
National Ambient Air Quality Standards (“NAAQS”) for ozone and fine particles promulgated by the EPA
have resulted in identification of non-attainment areas throughout the country, including Texas, Pennsylvania,
Ohio, New Jersey and West Virginia, where Sunoco operates facilities. Areas designated by EPA as “moderate”
non-attainment for ozone, including Philadelphia and Houston, would be required to meet the ozone
requirements by 2010, before currently mandated federal control programs take effect. In January 2009, the EPA
issued a finding that the Philadelphia and Houston State Implementation Plans (“SIPs”) failed to demonstrate
attainment by the 2010 deadline. This finding is expected to result in more stringent offset requirements and
could result in other negative consequences. Texas petitioned EPA to redesignate the Houston area as “severe”
non-attainment for ozone and in 2009 the EPA granted the petition. Under this designation, Houston’s SIP is due
in 2010 and attainment must be achieved by 2019. In 2005, the EPA also identified numerous counties, including
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